What private school owners should expect between the letter of intent and closing
If you have just signed a letter of intent to sell your private school, here is the short answer to what comes next: 60 to 120 days of due diligence, exclusivity, and negotiation, during which the buyer will examine every enrollment contract, financial statement, regulatory filing, and employment agreement your school has produced. Most deals that fail do not fail at the LOI stage. They fail here. The owners who close on time, and at the price they signed for, are the ones who prepared for this phase long before a buyer ever appeared.
After four decades in private education and many transactions across Canada and the United States, I can tell you that signing the LOI is the moment most owners exhale. It should be the moment you take a breath and get organized.
What does a letter of intent actually commit you to?
An LOI is mostly non-binding. The price, structure, and terms are expressions of intent, not obligations. What is typically binding is exclusivity: you agree to stop talking to other buyers, usually for 60 to 90 days, sometimes longer.
That matters more than most owners realize. The day you sign, your negotiating leverage begins to shift. Before the LOI, you had a market. After the LOI, you have one buyer, a ticking clock, and a school you still have to run. Every week of delay favours the purchaser. This is why the quality of your preparation and the discipline of your advisory team determine whether the deal you signed is the deal you close.
Why do school sales fall apart after the LOI?
In my experience, deals between LOI and closing are lost for five recurring reasons:
- Financial statements that don't hold up. Buyers and their lenders want clean, reconciled financials, ideally reviewed or audited. If your statements mix personal expenses with school operations, or if revenue recognition for tuition and deposits is inconsistent, expect the buyer to either discount the price or walk away.
- Enrollment surprises. A dip in re-enrollment deposits or a soft admissions season during diligence is the fastest way to a renegotiated price. Buyers are purchasing future tuition revenue. Demonstrating stable or growing enrollment and documented retention rates protects your valuation.
- Regulatory and licensing gaps. Private schools, career colleges, and language institutes operate under provincial and state frameworks that often require approval from the ministry or regulator for a change of control. If that application process starts late, your closing date slips, and slipping closings kill deals.
- Key-person and staffing risk. If the school is the owner, the buyer is nervous. Documented leadership succession, employment agreements for key administrators, and a credible transition plan all reduce the discount a buyer applies for founder dependence.
- Working capital and deferred revenue disputes. Tuition collected in advance is a liability, not a windfall. How deposits, prepaid tuition, and working capital are treated at closing is one of the most contested points in school transactions, and one of the least understood by first-time sellers.
None of these issues appear for the first time during diligence. They were always there. Diligence simply puts a price on them.
What happens during due diligence on a private school?
Expect the buyer's team to request and review, at minimum:
- Three to five years of financial statements, tax returns, and tuition revenue detail
- Enrollment data by grade or program, retention rates, and the current admissions pipeline
- All regulatory licenses, accreditations, and correspondence with ministries or state agencies
- Employment agreements, payroll records, and benefit obligations
- Real estate documents: leases, title, environmental reports, and facility condition
- Parent contracts, refund policies, and any litigation or complaints history
A well-prepared seller has this assembled in a secure data room on day one. A poorly prepared seller spends the exclusivity period hunting for documents while the buyer's confidence erodes. I have watched preparation alone preserve hundreds of thousands of dollars of value in a transaction, simply because the seller never gave the buyer a reason to doubt.
How do you protect your price between LOI and closing?
Four principles I give every client:
Run the school like you're keeping it. The single best defence of your purchase price is performance. Enrollment, collections, and staffing must stay strong through closing. Buyers re-trade on weakness, not on strength.
Control the timeline. Agree on a closing checklist with dates the week the LOI is signed. Regulatory applications, lender approvals, and legal drafting should run in parallel, not in sequence.
Keep the circle small. Confidentiality protects enrollment, staff morale, and your leverage. Premature disclosure to faculty or families creates exactly the instability a buyer fears.
Negotiate through your advisor. The buyer's diligence team will raise issues. Some are real, some are tactical. An experienced M&A advisor knows the difference and maintains a constructive relationship between the owner and buyer during the transition following closing.
Is 2026 a good time to sell a private school?
Market conditions currently favour well-prepared sellers. North American private education remains a growth sector; demand for quality independent schools and career colleges is durable, and acquirers, including private equity and strategic school groups, have returned to the market with capital to deploy. Pricing discipline is back as well: buyers are paying full value for clean, well-documented schools and discounting everything else.
That is the real lesson of the post-LOI phase. The market rewards preparation. If a sale is even two or three years away, the time to start positioning your school, organizing your financials, and understanding your value is now.
Frequently asked questions
How long does it take to sell a private school? From engagement to closing, typically 9 to 12 months. The LOI-to-closing phase alone usually runs 60 to 120 days, longer where regulatory change-of-control approval is required.
Can a buyer change the price after the LOI? Yes. The price in an LOI is non-binding. Buyers renegotiate when diligence reveals problems or performance softens. Preparation and continued strong operations are your protection.
Should I tell staff and parents during due diligence? Generally no, beyond a small need-to-know group. Confidentiality is usually maintained until closing or until a coordinated communication plan is ready.
Do I need an M&A advisor if I already have a buyer? Especially then. With one buyer and no competitive tension, an advisor's role in managing diligence, defending value, and structuring terms is where most of the value is preserved.
Thinking about selling your school?
Halladay Education Group has advised owners of private schools, career colleges, and language institutes across Canada and the United States for over two decades. If you are considering a sale, whether this year or several years out, a confidential conversation costs nothing, and the preparation insight can be worth a great deal.
Contact us at info@halladayeducationgroup.com or 1.800.687.1492.
